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Well at 500 points you really should just focus on units (plenty infantry) in my oppinion.. but if you insist i'd say give him the AoMI for a nice +1 save, or perhaps if you wanna build an expensive captain, take the Sword of Power or Sword of Sigismund (but you'd be able to buy 5 foottroops for just that swords price, so im not sure if its worth it tbh).
I don't usually take magic items at 500pts. Any bound spell items are good as at such a low points level your opponent might have no or little magic defence.
True, it's a fair point. I do usually take a Warrior Priest at 500pts though.
Ah yes. A WarriorPriest and a bound spell might work